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Monthly Archives: November 2014

Jack Ma, the 50-year-old founder & executive chairman of Chinese giant Alibaba, on Wednesday promised higher investments in India, without specifying the quantum or timeline. Addressing an India-China summit, organised by business chamber Ficci here, Ma said he was inspired by Prime Minister Narendra Modi and this was a beautiful time for India and China to do business.

Ma also said Indian sellers were the largest suppliers on Alibaba’s e-commerce platform after Chinese ones. “We have been doing B2B (business-to-business) for the past 15 years and, surprisingly, the second-largest suppliers to us are Indian sellers.” Indian suppliers were so smart they had caught the right opportunity, he said.

Ma’s visit, of less than 24 hours as part of a 100-member Chinese delegation, is the second India tour this year by a global e-commerce chief executive — the first being Amazon CEO Jeff Bezos’ in September. Among non-e-commerce global internet giants, Facebook founder & CEO Mark Zuckerberg had come to India last month.

Unlike both Bezos and Zuckerberg, who had multiple engagements in India, including meetings with the prime minister, Ma’s visit to India was a low-key one. The PM is currently in Nepal to attend a Saarc (South Asian Association for Regional Cooperation) summit.

Ma’s Alibaba has been in the news for its recent blockbuster $25-billion initial public offering on the New York Stock Exchange.

The Alibaba founder did not make specific announcements on investments in India, but the India-China summit on Wednesday resulted in signing of 12 memoranda of understanding, worth $2.4 billion, among companies from the two countries. Alibaba’s American rival Amazon had recently committed itself to investing $2 billion in India.

While Amazon entered the Indian market last year under a marketplace model, Alibaba is yet to start e-commerce operations in the country; at present, it only has a sourcing business here.

Speaking at the summit, Ma said Alibaba’s focus area in the coming years would be globalising and helping small businesses grow. “I was inspired and moved by PM Modi and this is a beautiful time for India and China to do business… Alibaba plans to further enhance technology for Indian sellers,” Ma said, adding he was keen to make more investments here.

A former English teacher, Ma spoke about how 400,000 Chinese were buying from India. He had no idea so many Chinese loved chocolates and tea from this country.

Alibaba has 8.9 million active sellers on its marketplace platform. By comparison, Flipkart, Snapdeal and Amazon have a little over 50,000 sellers each in India. Flipkart is aiming to get 100,000 sellers over the next 18 to 24 months.

In what could be an indication of its scale, Alibaba Group websites accounted for 60 per cent of the parcels delivered in China by March 2013 and 80 per cent of that country’s online sales by September 2014.

Ma’s visit to India generated all-round curiosity, including speculation on potential deals in the e-commerce market. There also was a buzz that Ma might meet Snapdeal co-founder & CEO Kunal Bahl, but the company said no such meeting was scheduled. In fact, Bahl has often referred to Snapdeal, the four-year-old company that became a marketplace player soon after launch, as the “Indian Alibaba”. There are existing synergies, too.

Recently, Snapdeal got a $627-million funding from Softbank, a Japanese telecom and internet corporation that also holds the biggest stake in Alibaba. Masayoshi Son, 57-year-old founder & CEO of SoftBank, had visited the Snapdeal office last month and addressed the company’s employees. Also, Snapdeal is one of the three e-commerce companies where Ratan Tata has put in money.

Indian e-commerce is still only about one per cent of the size of Chinese e-commerce market. But the sector here has become a favourite for investors.

Ma said internet could help transform lives in the current era. “Internet is a young business for young people, and India has a lot of young people. I was a teacher earlier and internet changed my life,” the Alibaba founder said.

Jack Ma in India:

* Indian sellers are the second largest on Alibaba’s B2B platform.

* Alibaba chairman Jack Ma said he is inspired by PM Modi and keen to invest more in India.

* About 400,000 Chinese people are buying from India; Alibaba has 8.9 million active sellers on its platform

* Flipkart, Snapdeal, Amazon and Ebay have in excess of 50,000 sellers each.

* Alibaba wants to enhance its technology for better service to Indian sellers.

* Ma vouched for mutual engagement between India & China as this is beautiful time to do business in India.

* Alibaba Group websites accounted for over 60 per cent of the parcels delivered in China.

* Chinese have been buying chocolates, tea among others from Indian sellers, claimed Ma.

* Recently, it created history of sorts when it recorded single day sales of more than $ 9 billion

The founding team of Axilor Ventures includes Shibulal and Gopalakrishnan along with Srinath Batni, Prof. Tarun Khanna and Ganapathy Venugopal, the company said in a statement.

For the selected start-ups, the founders will co-invest through their individual funds. The quantum of investment will range from Rs 30 lakh ($50,000) in the accelerator programme to Rs 6 crore ($1 million) for early stage companies, it said.

Ganapathy Venugopal, former head of Strategy & Planning at Infosys, has been appointed as the Chief Executive Officer at Axilor and will spearhead the venture.

While Shibulal and Batni stepped down from Infosys board in July, Gopalakrishnan left as Non-Executive Vice Chairman of the company in October.

Another founding member of the venture, Prof. Tarun Khanna is the Jorge Paulo Lemann Professor at the Harvard Business School and Director of the South Asia Institute at Harvard University.

Axilor Ventures is a business incubator set up to improve the odds of success of entrepreneurs and early stage companies.

It aims at energising the start-up ecosystem in the country by incubating ventures operating in the e-commerce, healthcare, life-sciences, sustainability and clean technology space, the statement said.

Axilor will focus on scalable, disruptive and technology-led business ideas from budding entrepreneurs and experienced professionals with entrepreneurial aspirations.

In its initial stage, the venture will run three programmes – Accelerator, Entrepreneur-in-Residence and Early Stage Funding.

Besides helping entrepreneurs and early stage companies with funding, it will assist them in other areas critical for success. These include infrastructure, mentorship, market access and talent, it said.

Through its programmes, Axilor aims to build a platform for innovation and entrepreneurship that will benefit entrepreneurs.

While, through its partnerships, it will help entrepreneurs connect with innovation ecosystems outside India.

The infrastructure to house the programmes is coming up in J P Nagar in South Bangalore. The first batch of the accelerator programme is scheduled to commence in the first quarter of 2015, it added.

The most critical factor as to whether a family business functions effectively in the present and whether it succeeds into the future is the approach taken towards succession planning and managing family conflict.

Those who work in a family business are acutely aware of the heightened potential for conflict and what this may mean for family harmony and the business’s success, especially when the emotionally charged issue of succession planning is raised.

While every family business is as unique as every family, it’s inevitable that one day the owner will exit the business, whether it’s through sale or succession to the next generation.

Growing up as the fifth child in a family of six children, I was never interested in joining the business founded by my father. In fact, only my youngest brother wanted to take on the challenge. Through a series of events three siblings, including me, now work in the business.

My career started initially as a graduate lawyer at the law firm Freehills, where I worked on some of Australia’s biggest corporate transactions. I was the last of the brothers to join the family business and the decision to leave law took a massive ego check and level of personal development. My two brothers and I have since bought the business from my parents in 2012 and it was the best decision I ever made.

Among a large number of factors that might affect a successful transition is the willingness of the founder or existing head to hand over control of the business, the ambition and desire of the new generation to make their mark, and – where there is more than one potential successor – the competing interests of those individuals seeking to take the helm.

The biggest gift we had during the succession process was that our parents have been happy to be less hands-on in the business while maintaining a mentoring role. We value our father’s continuing involvement to share his wisdom and industry knowledge while allowing us to explore new ideas and opportunities.

Managing family relationships can be challenging at the best of times. Trying to do this in a business context and through a matrix of varying rivalries and emotions including love, pride and loyalty can be much more complicated. Introduce a new set of dynamics with spouses and in-laws and another level of challenges arise.

A key step in our succession was to have a family meeting to propose the sale with all siblings and, most importantly, all spouses. It was critical that the purchase was on market terms based on an independent valuation with no favour shown. It was important to address the distasteful topic of inheritance and how this would be managed.

There were a number of new issues to be addressed on the aftermath of our successful transition. For us, it was important that all siblings are equal in the business in terms of responsibility, work load, rewards and outcomes.

At a PwC seminar we learnt that family businesses have a unique perspective on how business should be run and the hierarchical model advocated in most MBA programs can be a major stalling factor due to the power of family dysfunction.

We manage conflict by addressing it with total honesty and questioning ourselves whether a disagreement is worth creating a conflict. Where a stalemate arises we have an agreed deadlock mechanism, which turns to our father.

You must also operate in a mindset that recognises the value offered by your family in the business and never allow your ego or greed to take hold.

Ten tips for managing conflict and planning succession

No one set of rules can apply to all family businesses. However, here are some lessons we have found useful:

1. Always be honest about everything.

2. Don’t let issues fester. A big issue is a small issue that has been left unaddressed.

3. Implement a deadlock mechanism so your business is never without direction and abide by it.

4. The spouses are key stakeholders and are as important as the members of the business. Do not neglect their thoughts or feelings.

5. Address the distasteful topics, such as inheritance, as these are the things most likely to become an issue after the passing of the business founder.